Are Protective Labor Market Institutions at the Root of Unemployment? A Critical Review of the Evidence

Howell, David R.; Baker, Dean; Glyn, Andrew; Schmitt, John

doi:10.2202/1932-0213.1022

Cited by 148 publications

(114 citation statements)

References 30 publications

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“…Comparisons both across countries as well as over time are much more reliable with the net indicator since differences or changes in the tax system do not have an effect on the replacement rate. Interestingly, Howell and Rehm (2009) report only a small correlation between the OECD gross and net replacement rates. This emphasizes the importance of considering the net measure to take the unemployment benefit system adequately into account.…”

Section: Institutional Variablesmentioning

confidence: 99%

“…In contrast, reducing the level of employment protection and the level of unemployment benefits would have detrimental labour market effects in the majority of countries. This can at least partly explain the mixed impact of a change in employment protection and unemployment benefits on the labour market (Howell et al, 2007). The particular outcome of a change in the respective institution depends on other institutional factors.…”

Section: Fixed Effectsmentioning

confidence: 99%

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Labour Market Performance in OECD Countries: A Comprehensive Empirical Modelling Approach of Institutional Interdependencies

Sachs

Schleer

2013

SSRN Journal

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. Non-technical SummaryThe recent economic crisis has resulted in a dramatic deterioration of economic growth and labour market performance in various industrialized countries. There is a widespread view that economies under pressure associated with high unemployment or low employment rates need to change their institutional environment. This needs to happen by conducting structural labour market reforms in order to improve labour market performance by, for instance, facilitating job reallocation processes or increasing labour market flexibility. Nevertheless, some authors argue that an institutional reform which is successful in one country might not be equally successful in another economy. A reform is assumed to depend on the country-specific institutional framework. Despite extensive theoretical and empirical contributions about the link between labour market institutions and labour market performance, evidence on the impact of changes of labour market rigidities on labour market performance which take the country-specific institutional framework and potential institutional interactions into account is still scarce.This paper contributes to the literature on interdependent institutional labour market effects by analyzing the impact of interdependencies between institutional factors for the evolution of unemployment. We follow the general theoretical model of Belot and van Ours (2004) in order to select institutional factors which are expected to have (interdependent) effects on the labour market. In order to model interactions in an econometrically correct way, we apply an innovative model selection approach to this literature, which is combined with a classical dynamic fixed-effect estimator for a two-way error component model. In doing so, we identify higher-order institutional interdependencies which matter for unemployment for a panel of 26 countries with annual data ranging from 2001 to 2008. In contrast to the previous literature, this paper is the first to focus on the impact of higher-order institutional interactions on unemployment and one of the first to consider a dynamic model specification in the context of institutional interactions. It thereby allows for a more precise and detailed analysis of the impact of interdependencies between different labour market institutions on labour market performance on a cross-country level.The results suggest that there are substantial qualitative and particularly quantitative differences across countries in the ...

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Section: Institutional Variablesmentioning

confidence: 99%

Section: Fixed Effectsmentioning

confidence: 99%

Labour Market Performance in OECD Countries: A Comprehensive Empirical Modelling Approach of Institutional Interdependencies

Sachs

Schleer

2013

SSRN Journal

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“…In examining U.S. unemployment over the past few decades, one important window has been comparison with other countries, particularly Western Europe, with particular emphasis on how national institutions have shaped job quantity and to what extent there is a job quality-job quantity tradeoff (Howell et al 2007;OECD 1994). Again, however, there has been limited cross-national comparison of hours of work and how hours levels are set; perhaps the most prominent hours literature has consisted of debates on how annual hours have evolved in various countries (Ausubel and Grübler 1995;Bell and Freeman 2001;Schor 1991; but also see Houseman and Nakamura 2001;Tilly 1996;Wong and Picot 2001).…”

Section: Short Hours Long Hours: Hour Levels and Trends In The Retaimentioning

confidence: 99%

Short Hours, Long Hours: Hour Levels and Trends in the Retail Industry in the United States, Canada, and Mexico

Carré¹,

Tilly

2012

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in ABSTRACTIn settings where most workers have full-time schedules, hourly wages are appropriate primary indicators of job quality and worker outcomes. However, in sectors where full-time schedules do not dominateprimarily service-producing activities-total hours matter, in addition to hourly wages, for job quality and worker outcomes. In this paper we employ a sector-focused, comparative framework to further examine hours levels-measured as average weekly hours-and trends in Canada, the United States, and Mexico. We analyze the retail sector, which is of interest because of its high rate of part-time employment in the U.S. Based on our fieldwork in the United States and Mexico and qualitative literature on Canadian retail work, we argue that the combination of business strategies and very different institutional constraints will lead U.S. retailers to a greater extent and Canadian retailers to a lesser extent to shorten hours and expand part-time jobs, whereas in Mexico it will lead retailers to lengthen hours. We apply this argument to predictions about differences in levels and trends. Drawing on standard public data sources from the three countries, we compare means and run time series regressions to estimate trends net of cyclical effects. Results broadly support our predictions, especially the distinction between the United States and Canada on the one hand and Mexico on the other. We provide additional context for these findings.JEL Classification Codes: D22, J22, J23, J81, L81, P52

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“…Notable recent predecessors are Martin (1996), Scruggs (2006) and Howell et al (2007). Martin (2006) summarizes a series of results from an OECD research program that publishes international comparisons of UI coverages for various types of workers.…”

Section: Introductionmentioning

confidence: 99%

Measuring Unemployment Insurance Generosity

2009

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In this paper, we develop a methodology to summarize the various policy parameters of an unemployment insurance scheme into a single generosity parameter. Unemployment insurance policies are multdimensional objects. They are typically defined by waiting periods, eligibility duration, benefit levels and asset tests when eligible, which makes intertemporal or international comparisons difficult. To make things worse, labor market conditions, such as the likelihood and duration of unemployment matter when assessing the generosity of different policies. We build a first model with such complex characteristics. Our model features heterogeneous agents that are liquidity constrained but can self-insure. We then build a second model that is similar, except that the unemployment insurance is simpler: it is deprived of waiting periods and agents are eligible forever with constant benefits. We then determine which level of benefits in this second model makes agents indifferent between both unemployment insurance policies. We apply this strategy to the unemployment insurance program of the United Kingdom and study how its generosity evolved over time. Journal of Economic Literature Classification: J65, E24

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Are Protective Labor Market Institutions at the Root of Unemployment? A Critical Review of the Evidence

Cited by 148 publications

References 30 publications

Labour Market Performance in OECD Countries: A Comprehensive Empirical Modelling Approach of Institutional Interdependencies

Labour Market Performance in OECD Countries: A Comprehensive Empirical Modelling Approach of Institutional Interdependencies

Short Hours, Long Hours: Hour Levels and Trends in the Retail Industry in the United States, Canada, and Mexico

Measuring Unemployment Insurance Generosity

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